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Fuhrmeister Appraisal has answers to "Frequently Asked Questions"

Fuhrmeister Appraisal is happy to address any inquiries you might have about appraisals in Johnson County. Don't hesitate to contact us today.

What is an appraisal?
What does an appraiser do?
Why would a person require a real estate appraisal?
What is the difference between an appraisal and a home inspection?
What is the difference between an appraisal and a comparative market analysis (CMA)?
What does the appraisal report contain?
Upon completion of the report, what guarantee is there that the value conclusion is valid?
How are appraisers certified?
Who are an appraiser's customers?
Where does Fuhrmeister Appraisal get the information used to estimate values in Johnson County or other areas?
Why should I hire a licensed appraiser?
My mortgage statement has an item on it for PMI? Can I get rid of that?
Should I do anything in advance of the appraisal inspection
What is "Market Value?"
Does the appraisal belong to the bank or the consumer?
Which home renovations add the most to the price?

What is an appraisal?   (Go to list of  questions)

The procedure of performing an appraisal deals with an inspection which forms an opinion of value. There are three "common approaches to value" which helps the appraiser conclude this opinion or estimate. One of the methods in use is the Cost Approach, which is what it would cost to replace the improvements to the house, less the age and physical dilapidation, plus the land value. The most common approach in figuring the value of a home is the Sales Comparison Approach which deals with concluding a comparison to similar properties close by. The Sales Comparison Approach is commonly the most accurate and best indicator of value for a home. One of the least common approaches in appraising houses is the Income Approach, which is generally used to find the market value of a property based on what an investor would pay based on the capital produced by the building.

What does an appraiser do?   (Go to list of  questions)

An appraiser produces an unprejudiced and well supported assessment of market value, to be used in making real estate transactions. Appraisers summarize their professional investigation in appraisal reports.

Why would a person require a real estate appraisal?   (Go to list of  questions)

There are a lot of reasons to get an appraisal with the usual reason being real estate and mortgage transactions. Some other reasons for ordering an report include:
  • If you are applying for a loan.
  • If you would like to reduce your property tax burden.
  • To show a homeowner has 30% equity and remove Primary Mortgage Insurance.
  • To fight improperly assessed property taxes.
  • To settle an estate.
  • To provide you a leg-up when purchasing a home.
  • To find a reasonable property value when putting your home on the market.
  • To defend your rights if your property is being taken by means of eminent domain in a condemnation case.
  • Because a government agency such as the IRS requires it.
  • If you ever find yourself in a lawsuit.
If you need a more detailed explanation of the appraisal process, please click here.

What is the difference between an appraisal and a home inspection?   (Go to list of  questions)

Home inspectors do not come to an opinion of value and do not use the same forms as appraisers. A third-party home inspector will investigate the structure of the property, from the top to the foundation. For the most part, a home inspection report will explain the amenities and the necessities of the house: air conditioning (weather permitting), electrical functions, the condition of the heating system, the plumbing; then the structural integrity of the home such as the attic, visible insulation, walls, floors, ceilings, windows, then the foundation, basement and other visible structures.

What is the difference between an appraisal and a comparative market analysis (CMA)?   (Go to list of  questions)

Frankly, it's like comparing Shakespeare to reality TV. The CMA relies on vague trends in the market. The appraisal is based on similar proven comparable sales. The appraisal report will also include location and construction values. The CMA will provide a non-specific figure. Delivering a defensible and careful analysis, an appraisal will give a clear opinion of value.

But the most significant factor is who's creating the report. Real estate agents write CMA's, and they don't always know the whole market or have specific competence when it comes to home valuation. The appraisal is produce by a licensed, certified professional who has made a career out of valuing properties. Moreover, the appraiser is an unbiased party, with no vested interest in the value conclusion, unlike the real estate agent, who gets a commission based upon the price of the home.

What does the appraisal report contain?   (Go to list of  questions)

The main objective of an appraisal document is to let the reader know the value of the real estate in question, and depending on the scope of the report, you'll usually see the following:
  • Who engaged the appraiser and other intended users.
  • How the appraisal is supposed to be used.
  • The reason for the appraisal.
  • The type of value reported and a definition of that value.
  • The effective date of the appraisal.
  • Relevant property characteristics, including: location, physical attributes, legal attributes, economic attributes, the real property interest in question, and non-real estate items included in the valuation, such as personal property, trade fixtures and even intangible items.
  • Any known easements, restrictions, encumbrances, leases, reservations, covenants, contracts, declarations, special assessments, ordinances, and other items of a similar nature.
  • Division of interest, such as fractional interest, physical segment and partial holding.
  • The scope of work used while working up the appraisal.
For a more comprehensive look at the work that goes into an appraisal report click here: Sample Appraisal Report

Upon completion of the report, what guarantee is there that the value conclusion is valid?   (Go to list of  questions)

In communicating an appraisal report, each appraiser must see to it that each of the items below are covered:
  • The appraisal used a suitable analysis of the data.

  • Whether individually or collectively, there were no critical errors contained in the report, nor any material details left out.

  • That appraisal services were not rendered in a careless or negligent manner.

  • The final appraisal report was transparent, credible and defensible.
To become a state licensed appraiser, there are extensive education requirements as well as practical experience that must be attained - all with the objective of gaining the skills required to provide unbiased value opinions. Plus, appraisers must abide by a stringent industry code of ethics and observe national standards of practice for real estate appraisal. The rules for carrying out an appraisal and reporting its results are guaranteed by enforcement of the Uniform Standards of Professional Appraisal Practice (USPAP).

   (Go to list of  questions) Regulations regarding licensing and certification of Real Estate Appraisers vary from state to state. However, licensing and certification is most often associated with many hours of coursework, tests and real world experience. Once licensed, he or she is required to take continuing education courses so that the license doesn't expire. To see the specific requirements for any state click here.

Who are an appraiser's customers?   (Go to list of  questions)

Mortgage lenders are an appraiser's most likely customer, needing their services to ensure real estate involved in a mortgage transaction is adequate collateral for a loan. Appraisers also provide opinions in litigation cases, tax matters and investment decisions.

Where does Fuhrmeister Appraisal get the information used to estimate values in Johnson County or other areas?   (Go to list of  questions)

One of the primary tasks an appraiser engages in is to collect data. Data can be split into Specific or General. Specific data is gathered from the home itself; Location, condition, amenities, size and other specifics are documented by the appraiser while on site.

General data is gathered from a number of sources. Local Multiple Listing Services (MLS) provide information on recently sold homes that could be used as comparables. Tax records and other public documents reveal actual sales prices in a market. Appraisers routinely have to report when a property lies in a flood zone, and that information is retrieved from a FEMA data outlet such as a la mode's InterFlood product.

And most importantly, the appraiser assimilates general data from his or her past experience in creating appraisals for other properties in the same market.

Why should I hire a licensed appraiser?   (Go to list of  questions)

Any time the value of your home or other real property is being used to make a significant financial decision, an appraisal helps. For those selling a home, you'll want to figure out a price that gets you the most profit but also ensures you don't have to wait too long for a buyer to show up; an appraisal can help with that. If you're buying, it makes sure you don't overpay. For those settling an estate or divorce, an appraisal from Fuhrmeister Appraisal is the best way to ensure assets are split up properly. Simply put, a home is often the single, largest financial asset anybody owns. Knowing its true value means you can make wise financial decisions.

My mortgage statement has an item on it for PMI? Can I get rid of that?   (Go to list of  questions)

PMI is the common abbreviation for for Private Mortgage Insurance. PMI covers the lender if a borrower doesn't pay on the loan and the value of the house is less than the loan balance. Once you reach the point where your home's equity plus the amount you've paid is at least 20% of your loan balance, you can have your PMI dropped.

Is PMI a lineitem in your monthly mortgage payment?Call Fuhrmeister Appraisal today at 3193217912 or send us an e-mail. A current appraisal could save you thousands.

Should I do anything in advance of the appraisal inspection   (Go to list of  questions)

We start with an inspection of the property. During this process, we will come to your home and measure it, determine the layout of the rooms inside, confirm all aspects of the home's general condition, and take several photos of your house for inclusion in the report. On the home's interior, make sure it is clutter free and that we can find our way to things like furnaces and water heaters. In the yard, trim any bushes so we can be free to get an accurate measurement of exterior walls.

To help expedite our work as well as ensure a more accurate report, try if possible to have the following items:
  • Any records on the purchase of the property for the last three years.
  • Any documents, such as a title policy with information on encroachments or easements encroachments or easements.
  • Information on "Homeowners Associations" or condominium covenants and fees.
  • Brag sheet that lists major home improvements and enhancements, the date of their installation and their cost (for example, the addition of Energy efficiency upgrades or roof repairs) and permit confirmation (if available).
  • A list of "suggested" improvements if the property is to be appraised "as complete".

What is "Market Value?"   (Go to list of  questions)

In real estate appraising, Market Value (as opposed to Fair Market Value) is commonly defined as:

"The most probable price (in terms of money) which a property should bring in a competitive and open market under all conditions requisite to a fair sale, the buyer and seller each acting prudently and knowledgeably, and assuming the price is not affected by undue stimulus. Implicit in this definition is the consummation of a sale as of a specified date and the passing of title from seller to buyer under conditions whereby: the buyer and seller are typically motivated; both parties are well informed or well advised, and acting in what they consider their best interests; a reasonable time is allowed for exposure in the open market; payment is made in terms of cash in United States dollars or in terms of financial arrangements comparable thereto; and the price represents the normal consideration for the property sold unaffected by special or creative financing or sales concessions granted by anyone associated with the sale."

Does the appraisal belong to the bank or the consumer?   (Go to list of  questions)

In most real estate transactions, the appraisal is ordered by the lender. Even though it's the buyer that eventually pays for the report, the lender is the intended user. The buyer is certainly entitled to a copy of the appraisal - it's usually included with all the other closing documents - but is not entitled to use the report for any other purpose without permission from the lender.

It's different when it's the homeowner hiring the appraiser for things outside securing a mortgage. In these situations, the appraiser may stipulate how the appraisal can be used; for PMI removal, or estate planning or tax challenges, for example. If not stipulated otherwise, the home owner can use the appraisal for any purpose.

Which home renovations add the most to the price?   (Go to list of  questions)

A home's location - what city it is in and even what part of that city - is key to this popular question. For example, while quality appliances are attractive, a $7000 built-in refrigerator won't pay off in a neighborhood of moderately priced homes

No matter where you go, however, renovating a kitchen is almost always a safe investment. According to one national survey, kitchen remodels returned an average of 88% of the investment. In other words, a $10,000 kitchen remodeling project would add approximately $8,800 to the value of the home. Bathrooms are right up there with kitchens, returning 85%. Adding bedrooms and baths can also increase the value of your home as long as your home doesn't then become atypical for your neighborhood in terms of size.